Nigeria’s foreign exchange (FX) reserves recorded an accretion this week, with the gross reserves level increasing by USD337.89 million week-on-week (w/w) to reach USD36.73 billion as of 10 September 2024. The boost in reserves is likely attributed to the inflow of approximately USD900.00 million from the recently concluded domestic Federal Government of Nigeria (FGN) US Dollar bond issuance.
Despite the Central Bank of Nigeria’s (CBN) intervention of approximately USD121.00 million in the FX market during the week, the naira appreciated by 3.0% w/w, trading at NGN1,546.41/USD at the Nigerian Autonomous Foreign Exchange Market (NAFEM). The CBN’s intervention helped support the currency, though challenges remain as total turnover at NAFEM fell by 15.7% week-to-date (WTD) to USD980.92 million, with trades occurring within the range of NGN1,499.00/USD to NGN1,668.00/USD.
In the forwards market, naira rates saw mixed performance. The naira depreciated in the 1-month (-0.5% to NGN1,668.65/USD) and 3-month (-0.2% to NGN1,738.23/USD) contracts, while appreciating in the 6-month (+0.2% to NGN1,838.87/USD) and 1-year (+1.1% to NGN2,052.05/USD) contracts.
Looking ahead, analysts expect the naira to remain under pressure despite the CBN’s efforts to stabilize the currency. Market demand is expected to continue outpacing supply, given the central bank’s relatively mild interventions and ongoing weak foreign portfolio inflows (FPI). As a result, currency fluctuations are anticipated in the coming weeks, with possible interventions from the CBN to mitigate sharp depreciation.
